GHG Daily Monitor Vol. 1 No. 221
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December 02, 2016

Push for 45Q Extension Continues as Congress’s Work Days Tick Away

By ExchangeMonitor

With just days left in the 114th Congress, little attention has been paid to legislation calling for an extension and expansion of the 45Q tax credit for carbon dioxide sequestration. This has not gone unnoticed by the Western Governors’ Association, which in a plea Wednesday to congressional leaders asked that the measure be added as a rider to any relevant legislation being considered.

“Governors understand that tax treatment of carbon capture and sequestration projects is unlikely to receive consideration as stand-alone legislation during the final weeks of this Congress. They request, however, that S. 3179 be considered as a potential amendment to any appropriate legislation subject to adoption by Congress,” says the letter, addressed to Speaker of the House Paul Ryan (R-Wis.), House Minority Leader Nancy Pelosi (D-Calif.), Senate Majority Leader Mitch McConnell (R-Ky.), and Senate Minority Leader Harry Reid (D-Nev.).

In a separate letter sent Wednesday to Sens. McConnell and Reid, Montana Governor Steve Bullock called for the speedy adoption of legislation expanding the tax credit. “Today the EOR industry provides tangible benefits for the economy and environment, creating good paying jobs and keeping C02 out of the air. As you consider extending and strengthening the 4SQ tax credit for carbon dioxide, you should not only incentivize the expansion of that industry to enhance secure CO2 storage, you should seek to ensure the growth of the existing EOR industry, recognizing the benefits to our economy and environment,” Bullock wrote.

The 45Q tax credit is worth $20 per ton of CO2 captured for geologic storage and $10 per ton for CO2 captured and used in enhanced oil recovery. The program is due to expire once 75 million tons of credits have been used; half of the credits have already been claimed, and the program is anticipated to wind down around 2019.

Legislation to extend and augment the 45Q credit has been introduced in both chambers of Congress, but seems unlikely to move in the current lame-duck session.

The letter refers to a bill from Sens. Heidi Heitkamp (R-N.D.) and Sheldon Whitehouse (D-R.I.) that would boost the credit up to $35 per ton of carbon captured for use and $50 per ton captured for permanent geologic carbon storage. It would make credits available to industrial sources of CO2, not just the electric sector as has been the case to date.

A corresponding House bill from Rep. Mike Conaway (R-Texas) would extend the tax credit beyond the current 75 million-ton cap written into the tax code.

The House and Senate bills have co-sponsors from both parties.

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